Silver set to outshine Gold: Analysts predict stronger returns ahead

Silver is emerging as the metal to watch in the precious metals market. Analysts are turning increasingly bullish on its outlook, pointing to the widening gold-to-silver ratio and strengthening industrial demand as major catalysts. With silver still lagging gold in price gains and investment interest picking up — particularly through India’s growing ETF market — many experts anticipate that silver could offer superior returns in the near future.

In the precious metals market, silver is beginning to steal the spotlight from gold. Analysts are increasingly optimistic about silver’s prospects, citing the widening gold-to-silver ratio and growing industrial demand as key drivers. With silver prices trailing behind gold and investment interest rising, especially in India’s expanding ETF market, many experts believe silver could deliver higher returns in the coming months.

Over recent months, gold prices have rallied sharply, both globally and in India. Since the beginning of the calendar year, gold has surged by 25.1%, while silver has gained a relatively modest 13.5%. On Friday, silver closed at ₹97,442 per kilogram at the MCX spot market. This divergence in performance has prompted analysts to predict that silver will soon catch up — and potentially outperform gold.

Ajay Kedia, Director at Kedia Advisory, is among the experts betting on silver. “The rally in gold may take a breather, while silver is poised to give higher returns in the coming months,” he said. A key factor fueling this optimism is the rising gold-to-silver ratio, which recently crossed 100 — a rare occurrence seen only once since the Covid-19 pandemic, when it hit 126.

The gold-to-silver ratio measures how many ounces of silver are needed to buy one ounce of gold. A higher ratio indicates that gold has become disproportionately expensive compared to silver, suggesting that silver is undervalued. Historically, such high levels have been unsustainable. Over the past 25 years, the average ratio has been 68, while the 10-year average stands at 85. In the last decade, the ratio remained elevated partly because gold delivered a 260% return, whereas silver offered a modest 60%.

The World Silver Survey 2025 by the Silver Institute also supports this bullish view. It notes, “A high gold-to-silver ratio should help silver, as some investors may view the white metal as undervalued. Also, expected US interest rate cuts, along with elevated economic and geopolitical uncertainties, should continue to fuel gold and silver investment.” However, the report does caution that a weakening global economy could pose a headwind for silver due to its significant industrial applications.

Unlike gold, which is primarily an investment and jewelry asset, silver has a dual role — it is both a precious and an industrial metal. Over 60% of silver demand now comes from industries, particularly in electronics, solar energy, and automotive sectors. This industrial reliance makes silver more sensitive to economic cycles. In 2024, only 39% of total silver demand came from investors, jewelers, and silverware producers, compared to nearly 50% in 2016.

Analysts at Julius Baer highlight this dual nature as a double-edged sword. “While we generally see silver moving in gold’s slipstream, also benefitting from a weaker US dollar, it is susceptible to underperformance as long as risk aversion prevails,” their report stated. In times of economic uncertainty, investment demand alone has often been insufficient to offset the weakness in industrial demand.

Nevertheless, with green technologies like solar panels and electric vehicles driving silver usage higher, many believe that the metal’s industrial demand will remain robust over the long term. In India, the silver investment landscape is also evolving rapidly. Growing awareness and the expansion of silver-based Exchange Traded Funds (ETFs) are making it easier for retail and institutional investors to tap into this opportunity.

Given these dynamics, silver’s current undervaluation relative to gold, combined with long-term industrial tailwinds, offers an attractive investment proposition. Investors looking to diversify their portfolios and capitalize on the next big movement in the precious metals market might find silver an opportunity too good to ignore.

As the global economy navigates uncertainties, silver’s unique position as both a precious and industrial metal could finally propel it into a new era of growth.